by Dennis Crouch

At 12:01 a.m., this past Tuesday, the USPTO issued its newest batch of patents.  6549 utility patents; 13 reissues; and 699 design patents.

Back in 1848, the USPTO began its tradition of issuing patents every Tuesday. Over the course of 173 years, more than 9000 Tuesdays have passed and more than 11,000,000 patents issued.  During this time, the Patent Office has missed a handful of Tuesdays.  In the summer of 1945, the office skipped two weeks while the US was in the midst of WWII. It also skipped two weeks in the summer of 1970. I believe that delay was associated with the changeover to electronic databases at the Office and computerized printing.  On point, March 1971, the NYTimes published an article suggesting that the USPTO would pause printing that summer for a 12-week period due to printing cost increases associated “the inauguration of printing by computer.”  The times reported that “or several months it has been impossible to buy copies on the issue date.”  For those weeks, the patents “issued” on time, but were not really available until later.

Between 1850 and 1880, the Office also missed a handful of Tuesday issuances — always during Christmas week. Overall result though is 99.9% on time.

by Dennis Crouch

Apple Inc. v. Qualcomm Inc. (Fed. Cir. 2021) [Apple En Banc]

In this Inter Partes Review, the PTAB sided with the patentee Qualcomm and issued a final written decision that the challenged claims had not been proven obvious. (Note – this was after Qualcomm disclaimed some of the more dubious claims). Apple appealed.  (U.S. Patent No. 7,844,037).

Apple has a right to appeal under the statute, but Federal Courts will only hear cases involving an actual case-or-controversy that involves “an injury in fact.”  “To establish injury in fact, the alleged harm must be ‘concrete and particularized and actual or imminent, not conjectural or hypothetical.'” Slip Op; quoting Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) and Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992). The standing requirement is derived from Article III of the U.S. Constitution. Thus, although Congress purported provide a statutory right to appeal, no appeal is permitted unless the appellant can show some injury stemming from the outcome of the case below.

Apple and Qualcomm have a license deal, and Apple has licensed the patent at issue (along with at least 20,000 other patents).  Typically, a licensee has standing to challenge a patent, because it will help it escape from paying royalties. Here, however, Apple did not allege that the patent’s invalidity would impact any ongoing royalty payments.  Presumably, the rate is identical even if it is only 19,999 patents under the license.  In other words, Apple did not show how it is injured by the ongoing validity of the one challenged patent. (Actually there are two parallel cases, so “two challenged patents.”)

Now, Apple has petitioned the Federal Circuit for en banc rehearing, arguing that the outcome is contrary to MedImmune Inc. v. Genentech, Inc., 549 U.S. 118 (2007); Cardinal Chem. Co. v. Morton Int’l Inc., 508 U.S. 83 (1993); and Altvater v. Freeman, 319 U.S. 359 (1943).

The Federal Circuit’s decision is a classic Judge Moore opinion that identifies and defines a particular rule (here the in-fact-injury) and then strictly applies the rule to that facts at issue.  The problem though is that the Supreme Court’s constitutional analysis is not so cut-and-dry.  Here, the petition argues that the court’s analysis provides “rigid, patent-specific rules” that the Supreme Court has previously rejected.

Kaszuba v. Hirshfeld (Supreme Court 2021) [Petition for Certiorari][FedCir Decision]

This pending petition for certiorari involves a trademark registration dispute between Kaszuba (HOLLYWOOD BEER) and Hollywood Vodka LLC (HOLLYWOOD VODKA).  Kaszuba first registered his mark (albeit on the Secondary Register).  Later, HVL was denied registration — in part because of the existence of the Kaszuba’s mark.  HLV then filed a cancellation proceeding before the Trademark Trial & Appeal Board (TTAB).  After a drawn-out process, the Board eventually sided with HLV—entering judgment against Kaszuba as a sanction for discovery violations.

I’ll note that neither of these brands stand-up to the more popular Hollywood Brewing Co. (Hollywood, FL). 

Kaszuba’s new petition for writ of certiorari to the U.S. Supreme Court asks three interesting questions:

1. Whether the Federal Circuit erred in finding that Hollywood Vodka had standing under Lexmark and 15 U.S.C. § 1064.
2. Whether the Federal Circuit err in allowing Intervention by the USPTO Director under, the patent law provision of 35 U.S.C § 143.
3. Whether Administrative Trademark Judges are, for purposes of the Appointments Clause, Principal Officers who must be appointed by the President with the Senate’s advice and consent.

The second question is where plain error lies.  In its decision, the Federal Circuit allowed the U.S. Gov’t to intervene in the case based upon Section 143 (Hollywood Vodka did not participate in the appeal).  That section of the Patent Act does provide for intervention, but only specifically for appeals from the PTAB, and only in derivation, IPR, or post-grant review proceedings.

The Director shall have the right to intervene in an appeal from a decision entered by the Patent Trial and Appeal Board in a derivation proceeding under section 135 or in an inter partes or post-grant review under chapter 31 or 32.

Section 143 obviously does not provide authority for the PTO to intervene in an appeal from the TTAB.  However, that may be harmless error as the Federal Circuit has previously allowed intervention in trademark cases. See In re Bose Corp., 580 F.3d 1240, 1243 (Fed. Cir. 2009) (“Because the original appellee Hexawave did not appear, the PTO moved, and the court granted leave to the Director, to participate as the appellee.”).

Note there are lots of brewing Hollywood TM disputes.  Below is a screenshot of a few TM cases at the PTO.

by Dennis Crouch

The Federal Circuit’s new decision in Trimble Inc. v. PerDiemCo LLC reads like my recent Civil Procedure final exam.[1]  The topic is personal jurisdiction–when may a Federal Court exercise its power over an out-of-state patentee in a declaratory judgment action challenging the patent’s validity.  The holding is important–repeated and specific threats of litigation by an out-of-state patentee can be sufficient to establish personal jurisdiction for a declaratory judgment action.[2]  The decision relies upon the an expanded notion of purposeful availment from the Supreme Court’s 2021 decision in Ford,[3] but should also be seen as further limiting the holding of Red Wing Shoe.[4]

In the U.S., personal jurisdiction is handled on a state-by-state basis, even if the case is filed in Federal Court.  “Due process” requires a defendant to have sufficient connection with the forum state before a court can exert power over the defendant or the defendant’s assets.[5]  This lawsuit was filed in California against PerDiemCo, and so the personal jurisdiction question boils down to whether PerDiemCo has directed its activities toward California in a way that makes jurisdiction fair, just, and reasonable according to our traditions.[6]

PerDiemCo, the patentee, is a Texas LLC with rented office space in Marshall, TX.  Its sole employee is Robert Babayi–a patent attorney practicing in Washington DC who has apparently never visited the Texas office.  PerDiemCo owns a number of U.S. patents covering the electronic logging of hours for commercial vehicles and also a process known as geofencing.[7]  (Geofencing is the process of electronically “monitoring whether a vehicle enters or leaves” an area.)  PerDiemCo’s only apparent business is licensing its patents.

Trimble is a Delaware corporation with its headquarters in N.D. Cal. (Sunnyvale).  Trimble is traded on NASDAQ and has a current market cap of $18.75 billion. (TRMB) — most of its business is related to geospatial technology.  ISI has does business and has offices throughout the United States.  Innovative Software Engineering, LLC (ISI) is also involved in the lawsuit. ISI is a subsidiary of Trimble that is both incorporated and headquartered in Iowa.

The Purposeful Availment: Back in 2018 PerDiemCo’s Babayi mailed a letter to a ISI’s corporate HQ in Iowa, accusing ISI of infringing PerDiemCo’s patents.  ISI is a subsidiary of Trimble, and so forwarded the letter to Trimble’s Chief IP Counsel Aaron Brodsky located in Colorado.   The parties then began to conduct some amount of negotiation: “Throughout these negotiations, PerDiemCo communicated with Trimble via letter, email, or telephone at least twenty-two times.”  The communications apparently included express threats to sue Trimble for patent infringement.  However, all the communications were apparently via Brodsky in Colorado.

PerDiemCo exchanged twenty-two communications with Trimble in California over a period of three months, some through its subsidiary ISE in Iowa and others through its Chief IP Counsel in Colorado.[8]

In 2019, Trimble and ISE sued for declaratory judgment.  Rather than choosing Iowa or Colorado, the companies chose the Northern District of California, which is Trimble’s home court.

The Question: On these facts, may the California district court exercise personal jurisdiction over the defendant?

The Answer: The district court dismissed the case, finding that it would be unreasonable to assert personal jurisdiction.[9]  On appeal, however, the Federal Circuit reversed—finding no problem with the case proceeding in California.  In particular, the Federal Circuit found (1) sufficient minimum contacts with the state of California related to the cause of action and (2) that exercise of jurisdiction by a California court would be reasonable.

= = =

Directed to California: If you recall, PerDiemCo repeatedly communicated with Trimble, but only through individuals residing outside of California.  These were seen as contacts directed to California because they are “communications sent to Trimble, a California resident.”[10]  The court did not spend much time on this particular issue, but addressed it in a footnote:

The [District] court held that PerDiemCo’s communications with Mr. Brodsky in Colorado were, for personal jurisdictional purposes, directed to Trimble in California, rather than in Colorado. This focus is consistent with our cases. Maxchief Investments Ltd. v. Wok & Pan, Ind., Inc., 909 F.3d 1134, 1139 (Fed. Cir. 2018) (holding that, for personal jurisdiction purposes, a letter sent to a company’s counsel is directed to the company at its headquarters, not the location of counsel); Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed. Cir. 2001) (same); Akro Corp. v. Luker, 45 F.3d 1541, 1546 (Fed. Cir. 1995) (same).

Thus, we have contacts and threats of litigation directed toward a resident of California; and these threats relate directly to the eventual cause of action.

What about Red Wing: One big hurdle for Personal Jurisdiction is the Federal Circuit’s 1998 decision in Red Wing Shoe Co.[11]  In that case, court held that a patentee does not open-itself to personal jurisdiction in a particular state simply by accusing an in-state resident of infringement.  According to the court, that result would be unfair.

Principles of fair play and substantial justice afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum. A patentee should not subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement. Grounding personal jurisdiction on such contacts alone would not comport with principles of fairness.[12]

In Red Wing, there were three warning letters sent by the patentee HHI to the DJ Plaintiff Red Wing.  These letters apparently accused Red Wing of infringement and also offered to license the patents. In addition, HHI’s prior licensees sold licensed products in the forum state (Minnesota), but HHI did not control those sales.  After reviewing those facts, the Federal Circuit found those connections insufficient to for Personal Jurisdiction.  In particular, the court suggested that the minimum contacts prong had likely been met, but that it remained unfair that those limited contacts would lead to a court proceeding.

In Trimble, the Federal Circuit purported to uphold Red Wing Shoe, but limited the case situations with a small number of communications.  Rather, the court found that PerDiemCo’s contacts were “extensive” and went beyond simply “informing” Trimble of its infringement and seeking a license agreement.

PerDiemCo amplified its threats of infringement as the communications continued, asserting more patents and accusing more of Trimble and ISE’s products of infringement. Indeed, PerDiemCo went so far as to identify the counsel it retained to sue Trimble and ISE and the venue in which it planned to file suit. PerDiemCo’s twenty-two communications over the course of about three months fall well outside the “sufficient latitude” we sought to grant patentees “to inform others of [their] patent rights without subjecting [themselves] to jurisdiction in a foreign forum” on the basis of three letters sent over a similar time period in Red Wing.

The Trimble court found that the PerDiemCo communications should be collectively termed “a negotiation” rather than merely providing information. “And Trimble is headquartered in California, connecting California to Trimble’s claims, which is a consideration the Court in Ford found relevant in distinguishing its earlier decision in Bristol-Myers.” In the end, the court found that the minimum contacts were “easily satisfied.” And, any fairness concerns were also overcome.

In its 1985 Burger King Decision,[13] the Supreme Court expanded upon the five fairness elements highlighted by World-Wide Volkswagen Corp. v. Woodson.[14]  Trimble walks through these same elements, concluding that it is indeed fair to haul PerDiemCo into a California court.

• Burden on the defendant. Although PerDiemCo has a Texas office, the courts found that office “pretextual” and certainly a distance from Washington DC where Babayi is located. Still, the company has repeatedly filed lawsuits in Texas.  According to the appellate court, if Texas is OK, so is California.   The basic decision here is that PerDiemCo does not really have any home because it is merely the owner of intangible assets.  If PerDiemCo was instead an operating company, then outcome would have been totally different.[15]
• Forum state’s interest in adjudicating the dispute. On this second point, the court found that N.D. Cal. Has a significant interest in hearing the dispute because Trimble is a “resident” of Northern District of California.
• Plaintiffs’ interest in obtaining convenient and effective relief. Nearby federal court is helpful to the plaintiff Trimble.
• Interstate judicial system’s interest in obtaining the most efficient resolution of controversies. On this point, the court did not find any favor one way or the other.
• The shared interest of the several states in furthering fundamental substantive social policies. This does not appear to apply directly.

As you can see, the BK bullet points did not reveal any fairness concern, and thus  the appellate panel reversed the lower court’s dismissal for lack of personal jurisdiction.

= = = =

Personal Jurisdiction as Patent Law Specific but Not Patent Law Specific.

The Federal Circuit has for many years applied its own law to personal jurisdiction questions even though the doctrine is procedural in nature. Unlike questions of inconvenient venue, the court has found that jurisdiction is “intimately involved with the substance of the patent laws.”[16] For convenient venue questions, the court applies the law of the regional circuit court of appeals.

This patent-focused personal jurisdiction doctrine goes back several decades.  In Trimble though the court explains that since that time the Supreme Court has “made clear that the analysis of personal jurisdiction cannot rest on special patent policies.”[17]  In Particular, in its 2017 SCA Hygiene decision, the Supreme Court stated that “[p]atent law is governed by the same … procedural rules as other areas of civil litigation.”[18] The appellate panel also notes other areas where the Supreme Court “has repeatedly rejected special rules for patent litigation in the context of rules governing civil litigation generally.”

In its decision, the appellate panel only takes this change toward generalism halfway.  In particular, the court uses the Supreme Court’s guidance to narrow its application of Red Wing. But, the court does not question the underlying premise that Federal Circuit law should prevail on the question of personal jurisdiction.  This seems to be a bit of doublespeak or perhaps a lack of coherence that could be resolved by an en banc rehearing.

= = = =

[1] Trimble Inc. v. PerDiemCo LLC, 2019-2164, 2021 WL 1898127, at *1 (Fed. Cir. May 12, 2021).

[2] See, Silas K. Alexander and Nicole R. Townes, Repeated and Specific Litigation Threats – Sufficient Minimum Contacts, Knobbe Martens Blog (2021).

[3] Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021).

[4] Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998); See also Jack Henry & Associates, Inc. v. Plano Encryption Technologies LLC, 910 F.3d 1199 (Fed. Cir. 2018).

[5] Ford.

[6] See Int’l Shoe Co. v. Washington, 326 U.S. 310, 316–17 (1945) and Bristol-Myers Squibb Co. v. Superior Ct. of Cal., 137 S. Ct. 1773, 1779 (2017).

[7] Patents at issue here include: (1) U.S. Patent No. 8,149,113; (2) U.S. Patent No. 9,485,314; (3) U.S. Patent No. 9,621,661; (4) U.S. Patent No. 9,680,941; (5) U.S. Patent No. 9,871,874; and (6) U.S. Patent No. 10,021,198; (7) U.S. Patent No. 9,319,471; (8) U.S. Patent No. 9,954,961; (9) U.S. Patent No. 10,104,189; (10) U.S. Patent No. 10,148,774; and (11) U.S. Patent No. 10,171,950.

[8] Trimble.

[9] Id.

[10] Trimble.

[11] Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998); Genetic Implant Sys. Inc. v. Core–Vent Corp., 123 F.3d 1455 (Fed.Cir.1997).

[12] Id.

[13] Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)

[14] World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980).

[15] See Xilinx, Inc. v. Papst Licensing GmbH & Co. KG, 848 F.3d 1346 (Fed. Cir. 2017) (treating non-practicing entity differently than operating company who also owns patents).

[16] Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed.Cir.1995).

[17] Trimble.

[18] SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 137 S. Ct. 954 (2017).

by Dennis Crouch

Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc. (Supreme Court 2020)

This case makes me sad because it reminds me that my walk-able grocery store, Lucky’s Market, has closed down. Colorado based Lucky’s had its own trademark dispute with California based Lucky Supermarket.

The case before the supreme court involved two other uses of LUCKY:

The parties in this case have been fighting in federal court over trademark rights for almost 20 years; and in three separate actions.

The petition before the U.S. Supreme Court involves “defense preclusion” –asking when a defendant in a subsequent action will be precluded from raising a defense that was or could-have been raised in the prior action.  In its decision, the Supreme Court explained that there is no special doctrine of defense preclusion, but rather the courts should apply the general rules of claim preclusion and issue preclusion.

The first litigation ended in a settlement.  During the second litigation, Lucky Brand raised the prior settlement as a reason to dismiss, but the court denied the motion-to-dismiss without prejudice (thus not “on the merits”).  The second litigation was then decided on other grounds.  In the third litigation Lucky Brand again raised the prior settlement as a defense, and Marcel argued that it was precluded.  In its analysis, the Supreme Court focused on whether the third litigation involved the “same claim” as the second; and whether it mattered.

Claim preclusion bars relititgation of an already decided claim between two parties.  Our notice pleading system encourages parties to join together in a single lawsuit all the claims that the parties have against one another.  Once the lawsuit ends, our claim preclusion will step-in to bar any further litigation between the parties relating to that transaction or occurrence.  If, for example, a patentee sues a manufacturer for infringing claim 1 of its patent (and wins).  The patentee will be barred from later filing a lawsuit asserting claim 2 of the same patent against the same manufacturer for the same infringing behavior.

Claim preclusion is thought to also precludes defenses that were raised or that could have been raised in the the first lawsuit.  However, a key limiting factor that the court found today is the “same transaction” or “common nucleus of operative facts” test — and that test is defined by the well pled complaint.

Here, the Supreme Court explained that the two lawsuits did not involve the same claims: “Put simply, the two suits here were grounded on different conduct, involving different marks, occurring at different times.”  Thus, no claim preclusion. [I believe that both cases involved assertion of the “get lucky” mark, and so I don’t know what the court is talking about regarding “different marks.” – DC]

Note here that the court also suggested a possibility of eliminating claim preclusion to defenses altogether: “There may be good reasons to question any application of claim preclusion to defenses.” That issue though is saved for another day.

Issue preclusion bars relitigation of an already decided issue.  However, issue preclusion requires that the issue be actually decided. Although the defense was raised in the original lawsuit, it was not actually decided but rather dismissed without prejudice. Thus, no issue preclusion.

Trademark Law: In his short post on the case, Eric Moran notes:

The Court specifically pointed out the risk in barring such claims in trademark cases, when “liability for trademark infringement turns on marketplace realities that can change dramatically from year to year.”

The court could have allowed more conflation between these various cases, but drew a tight line on the “same claim” element of claim preclusion.  One ongoing debate on this topic in patent law is the extent that a patentee should be required to assert all of its patents related to a defendant’s accused infringing content at the risk of beinig precluded. Or, may a patentee file a first lawsuit with a first patent; then later a second lawsuit with a second patent; etc. Current Federal Circuit rule is that allegations of infringement of two different patents involve the “same claim” only if the claim scopes are “essentially the same.” SimpleAir, Inc. v. Google LLC, 884 F.3d 1160, 1167 (Fed. Cir. 2018); See also Acumed LLC v. Stryker Corp., 525 F.3d 1319 (Fed. Cir. 2008) (same claim also requires infringing activity to be “essentially the same”).

Patent Infringement Claim Preclusion: Only When Accused Device is “Essentially the Same” as Prior Adjudicated Device

by Dennis Crouch

This case is going to end up being a big one for our online marketplace.  Many many producers are finding knock-off versions of their products sold via Amazon — often with Amazon’s direct backing. The decision here support’s Amazon’s approach and is especially important coming from the pro-protection Federal Circuit. Importantly, the court here does not allow IP rights to be improperly extended in order to catch a counterfeit. 

Lanard Toys Limited v. Dolgencorp LLC and Ja-Ru (Fed. Cir. 2020)

Lanard makes the “Lanard Chalk Pencil” and sued the knock-off competitor Ja-Ru Products along with Lanard’s former distributor Dolgencorp and former retailer Toys-R-Us.

The setup begins with the clear statement that Ja-Ru copied the design and then Dolgencorp and TRU stopped buying from Lanard and started buying from Ja-Ru.  The question then is whether this setup is simply fair competition or is it somehow unfair or unlawful.

Here, Lanard made its chalk-pencil product look like a well-known unprotectable product — a pencil with an eraser.  Perhaps it shouldn’t be surprised that its associated exclusive rights are quite thin.

The trial court ended the case on summary judgment holding that (1) Ja-Ru’s product does not infringe the asserted design patent, D671,167; (2) that the asserted copyright over the pencil is invalid and not infringed; (3) Ja-Ur’s product does not infringe Lanard’s trade dress; and (4) there was no unfair competition since no IP rights were violated.

On appeal, the Federal Circuit has affirmed.

Infringing the Design Patent: The design patent is directed toward the “ornamental design for a chalk holder” as shown in the drawings.  35 USC 289 calls out design patent infringer as someone who as “applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale …”  Here, the court did not cite the statute, but went straight to the test in Egyptian Goddess that asks – what is the scope of the patented design? In that case, the court explained that the scope of a design patent will depend upon how it differs from the prior art.  Here:

The district court [] recognized that “the overall appearance of Lanard’s design is distinct from this prior art only in the precise proportions of its various elements in relation to each other, the size and ornamentation of the ferrule, and the particular size and shape of the conical tapered end.” In so doing, the district court fleshed out and rejected Lanard’s attempt to distinguish its patent from the prior art by importing the “the chalk holder function of its design” into the construction of the claim.

The Federal Circuit affirmed this approach as well as the district court’s separate consideration of functional and non-functional features of the design.

We have instructed trial courts that design patents “typically are claimed as shown in drawings,” but that it can be helpful to “distinguish[] between those features of the claimed design that are ornamental and those that are purely functional.” Egyptian Goddess.

In the end, the court compared the accused product with the patented design — keeping in mind the broad scope of prior art — and concluded that the ordinary observer would be drawn more to the differences than the similarities.

In its decision, the Federal Circuit focused some attention on the “points of novelty” that the Federal Circuit previously rejected as a requisite test for design patent infringement.  Here, the court recognized that the doctrine remains a useful approach when considering the scope of design patent claims.

Here, as a matter of claim construction, the district court undoubtedly considered the points of novelty of the patented design over the prior art. And the court placed those points of novelty in context by considering that those points of novelty would draw “the attention of the ordinary observer.” [W]e conclude that the district court correctly balanced the need to consider the points of novelty while remaining focused on how an ordinary observer would view the overall design. See Egyptian Goddess.

Slip Op.

On Copyright infringement, the court here essentially ruled that the pencil is more like a shovel than a cheerleader uniform. See Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. 1002 (2017).

In attempting to identify separable features, “the feature cannot itself be a useful article.” Star Athletica. … Here, Lanard’s ’458 copyright is for the chalk holder itself, and Lanard’s arguments in the district court and in this appeal merely confirm that it seeks protection for the dimensions and shape of the useful article itself. Because the chalk holder itself is not copyright protectable, Lanard cannot demonstrate that it holds a valid copyright.

Slip Op.

The appellate panel went on to similarly reject Landards trade dress & unfair competition claims. (“Lanard has not identified evidence with which it could satisfy its burden to prove at trial that, when customers see the Lanard Chalk Pencil, their minds jump to the producer of the product rather than the product itself.”)

Affirmed.

Todd Bank’s effort to save the dignity of goats has reached the U.S. Supreme Court.  The respondent in the case is Al Johnson’s Swedish Restaurant — a Door County Wisconsin mainstay. “Al Johnson’s is an authentic Swedish family owned restaurant where you can find goats grazing the sod roof.” [Goat Cam].

Al Johnson’s registered trade dress “consists of goats on a roof of grass.” When Bank petitioned the USPTO to cancel the mark, the TTAB refused — holding that Bank did not have standing to file the petition.  On appeal, the Federal Circuit affirmed.  Unlike the no-injury-required approach an AIA-review petitioner on the patent-side, the trademark law requires that a cancellation petitioner “believe[] that he is or will be damaged” by the mark’s registration. Here, Bank was not particularly injured, although he does claim to be disparaged by the mark:

The petition asks two questions – one on the merits and the other associated with sanctions from the court:

1. Whether Tam precludes disparagement as the basis of one’s standing under Section 14 of the Lanham Act, 15 U.S.C. § 1064, to challenge the validity of a trademark where the basis of the merits of the challenge, i.e., the challenger’s assertion as to why the mark is invalid, is unrelated to disparagement.

2. Whether a federal appeals court abuses its authority by sanctioning a party for arguing in favor of his position, even though: (i) the arguments and the position are meritorious; and (ii) the court claimed that the party had conceded that his position had been foreclosed by a decision of this Court, whereas the party, rather than having made such a concession, had argued that his position was not foreclosed by that decision.

In its decision, the Federal Circuit sided with the mark holder and then found the appeal frivolous. The court thus awarded cost and attorney fees to Swedish Restaurant.

Even though Mr. Bank appears pro se before us, he is an attorney and bears the commensurate obligations. Accordingly, we grant Swedish Restaurant’s motion for costs and attorney fees, including the costs and fees incurred in relation to the parties’ sanctions motions, and deny Mr. Bank’s motion for sanctions.

Id.

Goats Remain on the Roof

Agarwal v. Topgolf Int’l (Fed. Cir. 2020)

Writing about golf in the midst of a national health crisis it a bit misguided, but the invention at issue is still interesting. Amit Agarwal is a former patent litigator and current assignee of U.S. Patent No. 5,370,389 (1994 patent – expired).

As Agarwal explained in his patent infringement complaint, the invention “revolutionized the boring, slow sport of golf by infusing the golf driving range experience with technology.” The technology here is to individually track the balls hit and award points for distance and alignment.  The infringement lawsuit was filed in 2016.  TopGolf responded with a petition for inter partes review (IPR), which resulted in the claims being cancelled as obvious.  On appeal, the Federal Circuit has affirmed — effectively tagging Agarwal with a double bogie.

Agarwal’s likely best argument – that the invention wasn’t obvious – was hampered by the substantial deference given to the PTAB factual determinations that underlie an obviousness conclusion.  The court explained:

The simple fact that some contradictory evidence exists in the record does not demonstrate that the Board’s findings are unsupported by substantial evidence.

Slip Op.; citing Elbit Sys. of Am., LLC v. Thales Visionix, Inc., 881 F.3d 1354 (Fed. Cir. 2018).

Agarwal also raises the issue of unconstitutional takings, which the Federal Circuit again rejected:

Agarwal argues that a finding of unpatentability of a patent filed before November 29, 1999 in inter partes review is an unconstitutional taking. This court has already held that “the retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking under the Fifth Amendment” because patent owners “had the expectation that the PTO could reconsider the validity of issued patents” in inter partes reexaminations and ex parte reexaminations. Celgene Corp. v. Peter, 931 F.3d 1342, 1362–63 (Fed. Cir. 2019).

Note that Celgene’s petition is on this issue is pending before the U.S. Supreme Court with the following question presented:

Petitioner’s Question: Whether retroactive application of inter partes review to patents issued before passage of the America Invents Act violates the Takings Clause of the Fifth Amendment

US Gov’t Restatement of Question: Whether the cancellation, following inter partes review, of petitioner’s pre-AIA patent violates the Just Compensation Clause.

Petition.

by Dennis Crouch

In re: Infinity Headwear & Apparel, Docket No. 18-01998 (Fed. Cir. 2019).

This case is fairly silly – The claims at issue cover a hooded blanket and stuffed toy combination — found invalid reexamination. On appeal, the patentee argued that the PTAB had conducted an improper claim construction that “equated a monkey with the claimed hood.”

Unlike the present invention, however, Katz’s hooded jacket includes a stuffed monkey attached to, or forming, the back portion of the hood. . . .

[U]nlike the present invention where the hood itself forms the stuffed toy, Katz’s hood is stuffed into monkey to form the stuffed toy. Also, in Katz, a stuffed toy always exists because monkey, which includes separately stuffed arms and legs, is sewn to the back portion of hood. In contrast, in the present invention, no stuffed toy exists until blanket is stuffed into hood.

Invalidity affirmed on appeal (R.36).  Images from the invalidated patent and the key prior art (Katz) are shown below.

Yes, I am aware that this case – especially as whimsically presented here – pushes against my call for the Federal Circuit to actually write opinions. The PTAB decision is based upon anticipation, and the patentee provided a series of explanations regarding the distinction between its claims and the single prior art reference. I suspect that the Federal Circuit would actually have a difficult time penning the anticipation case even here.

by Dennis Crouch

Back in 2017, I published an article condemning Federal Circuit’s ramped-up practice of issuing R. 36 judgments in cases on appeal from the USPTO.  Rather than simply arguing about policy, I looked at the statute and concluded that Section 144 of the Patent Act requires the Federal Circuit to issue its opinion, not just judgments. Dennis Crouch, Wrongly Affirmed Without Opinion, 52 Wake Forest L. Rev. 561 (2017). Over the past two years many petitioners have raised this argument to both the Federal Circuit and the U.S. Supreme Court.  However, neither court has responded (denying those petitions without opinion).

Now comes Senju Pharmaceutical Co., Ltd., et al. v. Akorn, Inc., No. 18-1418 (Supreme Court 2019) with the following two questions:

1. Whether 35 U.S.C. § 144’s directive that the Federal Circuit “shall issue … its mandate and opinion” in all appeals from the Patent and Trademark Office precludes the Federal Circuit from resolving such appeals through a Rule 36 judgment of affirmance without opinion.
2. Whether, under this Court’s decisions in Graham v. John Deere Co., 383 U.S. 1 (1966), and KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), the Patent Trial and Appeal Board must consider all relevant evidence, including any objective indicia of non-obviousness, when assessing whether a patent is invalid under 35 U.S.C. § 103.

[Read the Petition].

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Senju’s U.S. Patent 6,114,319 claims an emulsified difluprednate (DUREZOL) used in a eye dropper to treat inflammatory eye disorders.  The claimed composition includes castor oil, and polyoxyethylene (20) sorbitan monooleat.

At the time of the invention (2000), difluprednate was known for the treatment of eye ailments; and the prior art also taught how to formulate steroids in emulsions in ways recited by the patent document.  However, Senju argued against any motivation to combine the prior art by migrating known steroidal suspensions into an emulsion. In addition, Senju presented objective evidence of non-obviousness: including unexpected results and industry praise.  Senju also asked the court to draw an inference from the fact that no other steroid emulsion has been approved by the FDA:

If [Akorn’s] argument that the teachings of Ding made emulsions an obvious choice were correct (which it is not), then one would expect to see several other FDA-approved emulsions after Ding was published—but we do not. . . .

[I]f a steroid eye drop emulsion were obvious in light of the prior art, then some industry player—including the assignees of the scientists whose inventions supposedly rendered petitioners’ invention obvious—would have chosen that formulation. The fact that none did is strong objective evidence of non-obviousness.

These secondary consideration arguments were ignored by the PTAB (although others were considered).  On appeal, the Federal Circuit affirmed without opinion and denied Senju’s petition for rehearing en banc.

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by Dennis Crouch

Novartis Pharm. v. West-Ward Pharm. (Fed. Cir. 2019)

West-Ward (now known as Hikma) is seeking to make and sell a generic version of the Novartis chemotherapy drug everolimus (Afinitor).  After filing its Abbreviated New Drug Application (ANDA), Novartis sued, alleging infringement of its U.S. Patent 8,410,131.

Following a bench trial, the district court sided with the patentee – finding the claims enforceable – not obvious. Novartis Pharm. Corp. v. West-Ward Pharm. Int’l Ltd., 287 F. Supp. 3d 505 (D. Del. 2017).  On appeal, the Federal Circuit has affirmed.

The claims at issue are method-of-treatment claims with one step — “administering … a therapeutically effective amount” of everolimus.  The preamble of claim 1 indicates that the treatment is for “inhibiting growth of solid excretory system tumors.”  Dependent claims 2 and 3 add limitations that the treatment is for a kidney tumor or “advanced solid excretory tumor.”

At the time of the patent filing, the compound (everolimus) was already known as an mTOR inhibitor; and mTOR inhibiors were known to inhibit tumor growth. Everolimus a derivative of rapamycin and structurally similar to temsirolimus — both of which were already identified as chemotherapy treatments for similar cancer types.

The district court took this evidence and agreed that a person of skill in the art would have been motivated to pursue everolimus as a potential treatment for advanced solid tumors. However, the court’s opinion then seemed to contradict itself by saying that there was no motivation to combine the prior art.   The district court also found that everolimus was one of many different research paths and that the prior art was not sufficient to create “a reasonable expectation of success in using everolimus” to treat advanced kidney tumors.

On appeal, the Federal Circuit rejected the district court’s confusing motivation-to-combine analysis, but agreed ultimately that the claims were not proven invalid (with clear and convincing evidence).  In particular, the appellate panel agreed with the lack of reasonable expectation of success.

Truthfully, this doctrine confuses me.  The claims simply call for administering an effective amount of everolimus to treat a solid tumor; and the courts held that a person of skill in the art would have been motivated to pursue administration of everolimus as a potential treatment. In addition to this motivation, the courts also require clear and convincing evidence of a “reasonable expectation of success.”  You might divide these into “a reason to try” and “reason to believe that the attempt would be successful.”

A party seeking to invalidate a patent based on obviousness must prove “by clear and convincing evidence that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so.” Procter & Gamble Co. v. Teva Pharm. USA, Inc., 566 F.3d 989 (Fed. Cir. 2009) (quoting Pfizer, Inc. v. Apotex, Inc., 480
F.3d 1348 (Fed. Cir. 2007)).

Another way to think about the doctrine here is that a creation that is “obvious to try” would still be patentable if the attempt was unlikely to succeed.  This situation comes up most often in situations involving many different potential solutions and it would be “obvious” to try each one until the solution is found.

Motivation to Combine: Regarding motivation to combine, the Federal Circuit particularly held that the district court had improperly required the patentee to prove that PHOSITA “would have selected everolimus over other prior art treatment methods.”  That heightened standard does not comport with the law and thus is not required.

I’ll note here that the district court’s approach was appropriate in the setup involving modification of a lead compound.  Precedent asks for an indication that the lead compound would have been selected over other potential lead compounds.  Here, however, the compound was already known and the only “new” element is giving an effective amount to a patient for the purpose of treating a particular illness.

The district court … appeared to apply or conflate the standard for these types of cases by requiring clear and convincing evidence that a person of ordinary skill “would have been motivated to select everolimus.” To the extent the district court required a showing that a person of ordinary skill would have selected everolimus over other prior art compounds, it erred. The proper inquiry is whether a person of ordinary skill would have been motivated to modify the prior art disclosing use of temsirolimus to treat advanced RCC with the prior art disclosing everolimus. This question was answered affirmatively when the district court found that a person of ordinary skill “would have been motivated to pursue everolimus as one of several potential treatment options for advanced solid tumors, including advanced RCC.”

Reasonable Expectation of Success: Despite a motivation to pursue treatment, the district and appellate court found that the claimed treatment would not have been obvious because the prior art did not show a sufficiently high “expectation of success.”

Note here that the requirement is an “expectation” of success — would PHOSITA have expected that the drug would work?  In this case, at the time of the invention, there was no clinical data on everolimus (as an anti cancer agent) and no completed trials for the other similar compounds (only phase I safety-focused data).  And, the district court noted that there had been many many past attempts to find a compound that works — most of them starting with some promise.   On appeal, the Federal Circuit found that the rebuttal evidence and arguments made by the patentee were sufficient to defeat an obviousness finding — giving deference to the district court factual findings.

The district court reviewed the [presented] evidence, determined that the molecular biology of advanced RCC was not fully understood, recognized the limitations in the temsirolimus phase I data, and found that such data did not provide a person of ordinary skill with a reasonable expectation of success. We hold that the district court did not err in its determination and affirm its conclusion that claims 1–3 of the ’131 patent would not have been obvious in view of the asserted prior art.

Non-Obviousness affirmed.

by Dennis Crouch

Due process ordinarily requires that a court have personal jurisdiction over the parties to a lawsuit.  In its 2016 opinion, the District Court dismissed M-I Drilling’s lawsuit against the Brazilian company Dynamic Air Ltda. (DAL) for lack of personal jurisdiction. M-I Drilling Fluids UK Ltd. v. Dynamic Air Ltda, 2016 U.S. Dist. LEXIS 27357, 2016 WL 829900 (D. Minn. 2016).  On appeal here, the Federal Circuit has reversed. M-I Drilling Fluids UK Ltd. v. Dynamic Air Ltda., 2018 U.S. App. LEXIS 12497 (Fed. Cir. May 14, 2018).

Law of the Flag: The alleged infringement here did not occur within the United States proper, but rather aboard U.S. flagged ships in international waters – the vessels Resolution and Pinnacle.  The district court held that the U.S. Patent Act applies to U.S. flagged ships — “While on the high seas, a vessel is deemed to be part of the territory of the nation to whose citizens it belongs, and under whose flag it sails.” However, the district court then dismissed the case for lack of personal jurisdiction.

Personal Jurisdiction over a Foreign Entity: In most U.S. civil litigation, personal jurisdiction is considered on a state-by-state basis: we ask “does the defendant have sufficient contacts with the state housing the particular court?”  A special rule (R.4(k)(2)) kicks in for foreign entities such as DAL who are not subject to the general jurisdiction of any U.S. State.  Under 4(k)(2), any court across the country will have personal jurisdiction so long as the defendant’s contacts with the United States (as a whole) are sufficient to comport with Constitutional due process and not offend “traditional notions of fair play and substantial justice.”

In finding sufficient minimum contacts with the U.S. here, the Federal Circuit counted contacts with the U.S. flagged ships — finding that DAL’s installation of the accused pneumatic conveyance systems on the HOS Pinnacle and the HOS Resolution created specific jurisdiction over the entity. “Nothing more is required to show that DAL purposefully directed its activities at the United States.”

Judge Hughes wrote the opinion for the court joined by Judges Reyna and Stoll. Judge Reyna also filed a concurring opinion to further discuss the international maritime issues.

Prior to the enactment of the 1952 Act, the only authority speaking on whether U.S. patent laws apply to U.S-flagged ships on the high seas was Gardiner v. Howe, an 1865 case from then-existing Circuit Court of the District of Massachusetts. 9 F. Cas. 1157, F. Cas. No. 5219 (C.C.D. Mass. 1865). In Gardiner, the asserted patent claimed an improvement in the sails of vessels. The accused infringer allegedly used the improvement on the sails of his U.S.-flagged vessel while on the high seas and argued at trial that he could not be held liable for infringement because U.S. patent laws did not apply on the high seas. The court disagreed, stating that the U.S. patent laws “extend[] to the decks of American vessels on the high seas, as much as it does to all the territory of the country, and for many purposes is even more exclusive.” The court reasoned that any contrary ruling would render valueless “patents for improvements in the tackle and machinery of vessels, or in their construction . . . .” Our predecessor court recognized the vitality of Gardiner in Marconi Wireless Telegraph Co. of America v. United States, when it held that U.S. patent laws extend to infringing acts at the American Legation at Peking in China. 99 Ct. Cl. 1 (1942).

Nothing in the legislative history of the 1952 Patent Act evidences congressional intent to narrow the territorial scope of the patent laws from that articulated in Gardiner. . . .

In 1990, Congress applied the logic expressed by the Gardiner court in drafting legislation to extend U.S. patent law to U.S. spaceships. 1990 U.S.C.C.A.N. 4058, 4060-62. . . . Section 105 of Title 35 thus provides that “[a]ny invention made, used or sold in outer space on a space object or component thereof under the jurisdiction or control of the United States shall be considered to be made, used or sold within the United States for the purposes of this title . . . .” Congress’s logic in extending U.S. patent laws to U.S.-spaceships in outer space lends strong support for finding U.S. patent laws extend to U.S.-flagged ship on the high seas. . . .

What is particularly troubling in this case is that if U.S. law does not apply to infringing activity on a U.S.-flagged ship in international water, then it is possible no law applies.

Personal jurisdiction is proper – on remand we’ll see if there was actually any infringement of a valid patent.

A few notes:

• Although the majority refers to the “high seas” and actions “beyond the territorial boundary” of any nation, Judge Reyna points out that “[t]he alleged infringement in this case occurred in the exclusive economic zone (“EEZ”) of Brazil. The EEZ is “‘an area beyond and adjacent to the territorial sea’ which ‘shall not extend beyond 200 nautical miles from the baselines from which the breadth of the territorial sea is measured.'” Elizabeth I. Winston, Patent Boundaries, 37 Temp. L. Rev. 501, 508 (2015) (quoting the United Nations Convention on the Law of the Sea, Dec. 10, 1982, 1833 U.N.T.S. 397, 418-19 (arts. 55, 57)).
• One of the most interesting quotes from the article is the following statement: “Our subject matter jurisdiction over this appeal is grounded in the commercial tort of patent infringement.” That phrase has only been used in one other court decision – Judge Newman’s dissent in the damages case of Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir. 1995) (en banc) (“Patent infringement is a commercial tort, and the remedy should compensate for the actual financial injury that was caused by the tort.”)